Combining Customer Information With Sound Judgment

When it comes to your customers, you know more than you realize. Thanks to modern data archive and customer resource management systems, there is now little shortage of client information — both individually and in aggregate. The challenge is no longer what a company knows about its customers, the challenge has become how to access that information, incorporate it in real time, and respond to it with each transaction.

Across industries, business customers expect personalized attention. For example, savvy restaurateurs understand the importance of knowing their regular diners’ names, food allergies or favorite bottle of wine. Fundraisers know which hot-button issue is likely to generate a contribution and customize their appeals to maximize response.

Credit unions have likewise taken a more personal approach to their customers’ banking. Tellers are encouraged to recognize clients and greet them by name. Credit offers are customized to meet the specific situation of each borrower. Increasingly, specific information about each customer is used to better respond to each transaction. In fact, credit unions frequently cite superior customer management as a key differentiator when attracting new clients and retaining current ones.

Front-office employees often have qualitative information that can enhance strategic decisions and should be included in back-end data systems. Conversely, detailed client data needs to be instantly available when making a customer-facing product decision. Unfortunately, there remains a disconnect between the front-office personnel handling transactions and the back-office information repositories where client data is stored. Credit unions must bridge this gap if they are to develop an effective customer-centric strategy.

Designing and implementing a customer-centric strategy increases client loyalty while at the same time ensuring uniformity to deposit product offers, lending decisions or discretionary fee waivers. When effectively deployed, these strategies not only help understand why a customer may be asking for an exception—to match a competitor’s offer for example—but also documents these decisions into future back-office decision processes.

Building a Customer-Centric Strategy

A customer-centric strategy is not simply providing good customer service; it requires planning to manage the many sources of client data and increasing number of transaction points. This means taking a holistic look at customer strategies and ensuring that each transaction process serves the common goal. While each transaction — regardless of where it originates — should be personalized for the individual expectations of the customer, it should also serve the business goals of increasing revenue, reducing customer attrition and improving the customer’s experience.

A four-part approach:

Plan the strategy;

Set an adoption timetable (including a pilot);

Measure customer feedback and acceptance;

Quantify the results.

This first step toward a holistic customer-centric approach is to have a strategy. Quantify all existing information available about each client, whether from internal systems of record or external data sources, and ensure that this information is readily available whenever required. This information should include critical qualitative input from customer-facing staff.

Let’s look at an example of this:

While traveling on vacation, Joe Eyesaver buys three pairs of sunglasses (one for himself, his wife and his daughter). Unfortunately, Joe’s credit card issuer declines the transaction citing triggers of fraudulent behavior. (People usually only buy sunglasses one pair at a time.) Generally this might be a good fraud prevention strategy to prevent unnecessary losses, but this purchase is anything but fraudulent. In fact, when Joe calls the credit union he is quick to point out to the call center rep that he used the same credit card to purchase his airplane tickets to the location city where he was making the purchase.

Unfortunately, in most cases this qualitative customer feedback will never be integrated into proactive customer strategies. However, the credit union that does so will have achieved a measurable impact on customer experience and lifetime value.

A more general example of this applies to deposit accounts. A credit union may consider lowering home equity lines of credit because of home price depreciation on customers with hundreds of thousands of dollars in deposits. This is a decision strategy that does no favors for the customer or the credit union, where customer retention should be a priority.

Strategies should allow for insights from customer-facing employees, who should be empowered to provide insights best discovered through customer interactions. Actively engaging customer-facing staff to align strategy designs with practical real-world experience will improve adoption and better satisfy customers, and meet objectives. This collaborative approach ensures complete adoption from customer-facing bankers and measurable customer experience improvements that are quantified by improved customer retention and new customer acquisitions.

Starting with a pilot project, launch the roll-out. This should include mechanisms to adjust the strategy and update data as the project advances. Next, measure customer response, both in terms-of reactions to changes in customer service levels, as well as any changes to responses to product offers. Finally, keep a scorecard; measure the results as they apply to the organization’s long-term goals.

Establishing objective measures of success is critical to making sure that the piloted strategy meets financial hurdles without creating attrition with existing customers. Regardless of what is being implemented — such as deposit products fee management policies, time deposit rate exceptions policies, customer servicing strategies, or risk assessment models and treatment strategies — it’s critical that shareholders and customers are served by these strategies. Establishing clear metrics for success and accurately monitoring these metrics ensures consistent outcomes.

Customer-Centric = Long-Term Competitiveness

Credit unions that successfully implement holistic customer-centric strategies immediately improve operating efficiency. The resulting customer treatment strategies are easy to understand and apply consistently across the enterprise, resulting in improved customer service scores as customers come to appreciate the value of their relationship.

Investing in customer-centric strategies can help ensure a credit union’s long-term competitiveness by differentiating the organization from its competitors and by training employees to proactively pay attention to what is most important to the best customers. Returns on investing in superior customer-centric strategies can exceed 20 percent the first year of implementation. These results can be compounded in subsequent years due to repeat business, new customer referrals and customer loyalty.

John Taylor is a senior business consultant with Experian’s Global Consulting Practice in Costa Mesa, Calif.